Germany makes moves for innovation
The latest report on innovation in Germany, commissioned by DG Enterprise of the European Commission and written by representatives of the centre for European economic research in Mannheim. Germany, gives a qualified endorsement of the measures being taken by the country's federal and regional authorities. It summarises the activities of the central government as well as those of the individual states (Länder) as following similar methods in search of similar objectives. Briefly, these are to encourage innovation activities by enterprise, strengthen German performance in new information and communication technologies, increase cooperation and technology transfer between public research and industry, improve the secondary and tertiary education system, strengthen Germany's position in new cutting edge technologies, improve the framework for start ups and technology-based firms, increase the competition on markets dominated by public enterprises, strengthen internationalisation of research and innovation activities, introduce new approaches in public promotion of innovation activities and, finally, to stress the relevance of regional approaches to innovation policy. The policies designed to pursue these goals saw 'no basic change' in Germany in the period that the report was designed to cover (December 2000 to April 2001). However there were some new developments in bringing these goals nearer to fruition. An additional 930 million euro has been allocated to the 'Investment programme for the future', which will be dedicated to genome research, higher education, attracting top scientists from abroad, modernising vocational training schools and strengthening innovation in the new Länder (those that joined from the former state of German Democratic Republic). In addition, the federal ministries of both education and research and of economics and technology launched an action programme in March this year named 'Knowledge creates markets', which is designed to accelerate the transfer of knowledge and technology between science and industry. This was followed in the same month by the education and research ministry's launch of 'Innovative regional growth poles' a programme providing public funding to regional innovation concepts in the five new Länder. The federal ministry of education and research also launched an action programme named 'Lifelong learning' geared at fostering further education and vocational training at all levels. As well as funding initiatives, institutional reform also took place in the period of the study. This included the merger GMD, Germany's largest public research centre in the field of information technology, with the Fraunhofer Gesellschaft. The federal ministry of economics and technology started a systems evaluation of the promotion of collaborative research among SMEs (small and medium sized enterprises), aiming to increase the efficiency of this collaboration. Existing areas of innovation support have also been strengthened, such as the establishment of networks of competence, which have been focused on areas such as optical technologies, genome research, bio-informatics and health research, the number of networks now totalling 38. Tax reform designed to strengthen incentives for enterprises to increase investment in innovation came into force in January 2001. And the programme designed to help address the need for IT (information technology) professionals, the so-called Green card regulation, has helped bring in about 5,700 IT experts to the country between August 2000 and March 2001. In terms of future development in innovation, the report gives a frank assessment of Germany's position. 'Traditionally, the strength of the German economy lies in the fast and far reaching diffusion of new technologies. But as the innovation cycles become shorter this strength is called into question,' it says. It adds that competitors have been faster in new 'technological trajectories' such as in the information communications technology and biotechnology sectors. The report also highlights that expenditure on expanding the knowledge base was around 175 billion euro, or 8.8 per cent of GDP, which it claims 'shows a steady decrease in recent years'. However R&D (research and development) expenditures in the economy as a whole started increasing from 1995 onwards, and showed more participation by SMEs (small and medium sized enterprises). But internationally, Germany is, according to the report, falling further behind its international competitors in respect of R&D expenditure, falling back to seventh place behind Sweden, Finland, South Korea, USA, Japan and Switzerland. The R&D expenditure has shown a trend of moving more towards the automobile sector and away from the pharmaceutical sector. R&D-intensive industries fared better during the economic difficulties of the early 1990s and their projected growth is higher than non-R&D intensive industries - 3 to 5 per cent as compared with 2.5 to 3 per cent. The exports of R&D intensive goods has also been on the rise faster than the equivalent figures for non-R&D intensive goods. There has also been an increase in the number of innovative enterprises in Germany. The report attributes this to both a better attitude to innovation among enterprises and the fact that enterprises that are not innovative have dropped out of the market. German statistics for innovation intensity (innovation expenditure related to sales) is second highest in the EU and the sales of innovative enterprises have been on the rise since 1994. But the obstacles to further innovation remain clear - lack of funding and skilled technical personnel. There has been an increase in the number of start up companies in Germany, particularly in cutting edge, which has been helped by the country's record on early phase financing, an area in which it leads Europe. Other trends that have emerged in German R&D include a greater propensity to use third party sources to carry out the research and an expansion of German R&D activities abroad. The opposite is also true, with Germany becoming an increasingly attractive destination for foreign researchers - Germany has the highest R&D intensity in Europe for US subsidiaries and is second only to the UK for Japanese ones. The report gives a breakdown of Germany's strengths and weaknesses within the context of the 17 indicators used in the European innovation scoreboard. 'Germany shows a specialisation in technology intensive manufacturing sectors, a high level of R&D investment and high-tech patenting, and an SME sector that has a rather high propensity to innovate. A weak performance may be observed with respect to vocational training and other types of participation in further education by the working age population, the share of venture capital and new capital raised in stock markets in GDP, the share of new-to-market products in total manufacturing turnover and the diffusion of new information and communication technologies in economy and society. In the second half of the 1990s, the values of the various indicators has changed only slightly in Germany, while most other EU countries experienced a significant increase in most innovation scoreboard indicators,' it says.
Kraje
Germany